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Pensions Bill

It gives me great pleasure to respond to the noble Baroness’s no-brainer. The trustee corporation will receive all members’ contributions. Most will be invested on members’ behalf but of course there will be a charge for running costs—direct costs such as salaries and lease of premises, and indirect costs such as external contracts. Therefore, the trustee corporation is accountable to the scheme members for how their money is invested and in relation to whether the charges are reasonable and proportionate. As with all pension schemes, this scheme will produce an annual report and accounts, which will be audited and published. We discussed this audit when debating Clause 58. The trustee corporation is being set up as a non-departmental public body. This places an additional requirement on it, as its accounts, setting out moneys received from charges and what it has spent on running the scheme, have to be independently audited by the National Audit Office and laid before Parliament. Although the two sets of accounts are separate, they are so closely linked that it is inconceivable that one can be looked at without examination of the other. Whether the scheme accounts will form an annex to the NDPB accounts or whether it will be the other way round is a detail yet to be decided. However, I can say that the scheme members and Members of Parliament will see both sets of accounts. As an NDPB, the way in which the trustee corporation operates will be set out in a framework document. This will follow the guidance for all NDPBs issued by Her Majesty’s Treasury and the Cabinet Office. In particular, the framework document will follow the Treasury guidance, Managing Public Money. It will specify how the NDPB must account for any money received; it will set out management and financial responsibilities; and it will clarify internal and external audit arrangements. It will also set out requirements for reporting to the department, including on financial performance. These requirements make it absolutely clear that the corporation will be obliged to make robust arrangements for internal financial control. I now move on to the amendments. As the noble Baroness explained, Amendment No. 112S would require the trustee corporation to establish a committee to review the corporation’s internal financial controls, and Amendment No. 112T would require such an internal audit committee to produce an annual report. At this stage, before the detailed workings of the trustee corporation are fully developed, it would seem premature to specify that that should be done through a committee, although it may well be the right way forward. While that is a standard responsibility of non-executive directors on a board, the role of such a board is not absolutely comparable with the role of the members of the trustee corporation. Those members may choose to create a committee but they may prefer some other way, and at this juncture I cannot see a reason to tie their hands in relation to such matters. NDPBs are already required to produce an annual report and accounts and to lay them before Parliament. The accounts would normally include an audit report. Given the framework in existence for NDPBs, we would prefer not to prescribe further the way in which the trustee corporation should assure itself about internal financial control. However, I acknowledge that the noble Baroness has raised important matters and the committee as outlined may well be the appropriate way to proceed in due course, but it is simply that we would not particularly want to tie the hands of the NDPB at this juncture.